Industrialización en Paraguay

8/10/2019 Industrializacin en Paraguay

1/31

State-Led Industrialisation: The Evidence on Paraguay, 1852-1870Author(s): Mario PastoreSource: Journal of Latin American Studies, Vol. 26, No. 2 (May, 1994), pp. 295-324Published by: Cambridge University PressStable URL: http://www.jstor.org/stable/157945.

Accessed: 19/07/2011 06:20

Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at.http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless

you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you

may use content in the JSTOR archive only for your personal, non-commercial use.

Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at .http://www.jstor.org/action/showPublisher?publisherCode=cup..

Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed

page of such transmission.

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of

content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms

of scholarship. For more information about JSTOR, please contact [email protected].

Cambridge University Pressis collaborating with JSTOR to digitize, preserve and extend access toJournal of

Latin American Studies.

http://www.jstor.org
http://www.jstor.org/action/showPublisher?publisherCode=cuphttp://www.jstor.org/stable/157945?origin=JSTOR-pdfhttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/action/showPublisher?publisherCode=cuphttp://www.jstor.org/action/showPublisher?publisherCode=cuphttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/stable/157945?origin=JSTOR-pdfhttp://www.jstor.org/action/showPublisher?publisherCode=cup


2/31

State-led

Industrialisation:

The

Evidence

on

Paraguay,

185

2-I

870*

MARIO PASTORE

In

the

last three

decades,

the economic

history

of

Paraguay

has

been

subject

to

an intense reexamination. It has

been

claimed that the state

in

Paraguay

led a

'spectacular

industrialisation effort'

in

the second

half of

the

nineteenth

century

and

that this effort was

prematurely

truncated

by

war.

One

author,

for

example,

has stated

that

From

I85

Z

on,

free circulation on the river Parana

permitted

a

rapid

increase of

exports,

mostly

under state control. The resources thus freed were devoted to

the

development

of

the

modern manufacture of industrial

goods

and

plant:

iron and

steel,

engineering,

shipbuilding, brickmaking,

etc.

A

railway

and a

telegraph

were

installed

without

incurring

an

external debt. The

experiment

was nevertheless

spoiled

by

the

war with the

'Triple

Alliance'

(1864-1870),

which

opposed

Brazil,

Argentina,

and

Uruguay

to

Paraguay,

and

resulted

in

the

demographic

and

economic

collapse

of the

country.l

These so-called

'revisionist'

hypotheses,2

however,

turn out to

be

*

This

paper

was

conceived when

the

author

was

visiting

Washington

University

in St

Louis.

An

earlier

version

was

presented

at the Latin American

ndustrialisation

ession,

X International Economic

History

Congress,

Leuven,

August

I990

and

the

L

Congress

of

the

US

Economic

History

Association, Montreal,

September

990.

Thanks are due

to

Douglass

North,

Enrique

Cardenas

and other

participants

n

the session

on Latin

American

Industrialisation,

as

well as to Richard

Salvucci,

Jacques

Barbier,

David

Landes

and,

especially,

Ricardo

Salvatore,

for their

comments,

questions

and

suggestions.

Partial

financial

support

was

provided by Washington University's

Center

in

Political

Economy,

the

Hewlett

Foundation,

and

the Mellon

Foundation.

1

See

Jean

Batou,

Cent

ans

de

resistanceau

sus-developpement.

'industrialisationde

fA4merique

latine

et du

Moyen-Orient

ace

au

defi

europeen,

770-187o

(Geneva,

1990),

p.

460.

Quoted

excerpts

are from Batou's

English summary,

pp. 45 -69. I thank David Landes for

having

called

this

work to

my

attention.

2

Though

Batou's

Cent ans is the most

recently

published

summary

of

revisionist

hypotheses

and

supporting

evidence available

in

secondary

sources

Vera Blinn

Reber's

'Modernization from Within:

Trade

and

Development

in

Paraguay,

I8I0-I870'

(unpublished

book

manuscript, Shippensburg University,

Carlisle,

PA,

I990)

is the

latest and most

thorough

statement

based

on archival

sources. From the

long

list

of

earlier contributions to this

'genre',

the most relevant for our

purposes

are

Thomas

L.

Whigham,

'The

Iron

Works

of

Ybycuf,

Paraguayan

Industrial

Development

in

the

Mid-Nineteenth

Century',

The

Americas,

vol.

35

(1978),

pp.

201-18

and

John

Hoyt

Williams,

The

Rise

and

Fall

of

the

Paraguayan

Republic

(Austin,

Texas,

I979),

both based

on archival research. No historiographical study of the Paraguayan revisionist school

Mario Pastore

is

at the

Department

of

Economics and Latin

American Studies

Program,

Tulane

University,

New Orleans.

J.

Lat. Amer.

Stud.

26,

295

324

Copyright

?

1994

Cambridge University

Press

295


3/31

296

Mario Pastore

supported by only

a

very

general

description

of

foreign

trade

and state

investments.

Quantitative

data on the

behaviour

of

exports

and

imports,

on

government revenues, expenditures

and

investments,

as

well as on

the

nature and

volume of

output produced

by

state

enterprises

are,

in

general,

rather

meagre

and

unreliable.

Thus,

the

hypothesised

connection

between

state

exports

and

state

investments

cannot be

verified

empirically.

Similarly,

the data

do

not

suggest

that the economic

growth

that did take

place

was industrial in

nature,

nor do

they

support

the

claim that

the

expansion

of the

communications

infrastructure had

much economic

importance.

Furthermore,

revisionist

authors themselves have

begun

to

question

previous

assertions

regarding

the extent of

industrial

growth

and

population losses resulting from the war; the deleterious economic

consequences

of

the war

may

also have

been overstated.3

A

careful look at the

evidence,

however,

suggests

that

these contentions

hold even

though

the

agricultural export

boom

appears

to

have

furnished

is

yet

available,

but its evolution

may

be traced

in

M. S.

Alperovich's

'La

dictadura del

Dr. Francia en la

historiografia

del

siglo

XX',

Estudios Latinoamericanos

(Wroclaw),

vol.

5

(I979), PP. 87-99,

Sergio

Guerra

Vilaboy,

Paraguay,

de la

independencia

la dominacidn

imperialista,

18II-I870

(Havana,

1984)

and Reber's Introduction

in

'Modernization

from Within'. Paraguay's revisionist school is related to Argentina's, analysed in Tulio

Halperfn

Donghi's

El revisionismohistdrico

argentino

Buenos

Aires,

1970).

Revisionist

hypotheses

have dominated the field of nineteenth

century

Paraguayan

history

in

the

last three

decades.

Their

influence

on

general

syntheses

of

nineteenth

century

Latin

America has been

widespread

as

well,

and

is evident

in,

for

example,

David Bushnell

and Neill

Macaulay's

The

Emergenceof

Latin America

in

the

Igth

Century

(New

York,

1988).

3

Thomas L.

Whigham,

for

example,

now

acknowledges

that his earlier claims of

industrial

development

may

have been too

sanguine.

See The Politics

of

River Trade:

Tradition and

Development

n the

Upper

Plata,

1780o-870

(Albuquerque,

New

Mexico,

1991),

pp.

71-2.

Also,

Vera

Blinn

Reber

persuasively argues,

in 'The

Demographics

of

Paraguay:

a

Reinterpretation

of the Great

War,

I864-1870',

Hispanic

American

Historical

Review,

vol.

68,

no. 2

(May I988),

pp.

289-319,

that

previous

estimates

suggesting

a

population

loss of over

50

per

cent

may

be overstatements. She instead

suggests

that the war

'actually

cost

Paraguay

between

8.7

and

i8.5

per

cent of

its

prewar population' (p.

290).

While

granting

Reber's

point

that the

magnitude

of

Paraguay's

population

loss

has been

exaggerated,

in

'Some

Strong

Reservations:

A

Critique

of Vera

Blinn

Reber's

The

Demographics

of

Paraguay:

A

Reinterpretation

of the Great

War,

I864-1870 ',

Hispanic

American

Historical

Review,

vol.

70,

no.

4

(November I990),

pp.

667-78,

Thomas

L.

Whigham

and

Barbara

Potthast

attacked

her

estimate,

which

they

misrepresented

as the lower bound

of

the interval she

proposed

(p.

667).

However,

Whigham

and Potthast failed to notice one of the weakest

points

in

Reber's

estimate,

that

is,

that it is based on

a

non-linear

regression

with

very

few

degrees of freedom. Finally, that the economic devastation caused by the war may have

been overstated

as well

may

be

gleaned

from

'El

Paraguay

segun

Wisner',

Revista del

Instituto

Paraguayo

(39-I903), pp.

763-73.

The

present

article concerns itself

with the

question

of

state-led

industrialisation

only.

War-induced

population

and economic

losses

are

more

appropriately

discussed

in

connection

with the

post-war

period

and

lie

outside its bounds.


4/31

State-led Industrialisation n

Paraguay 297

the state

with

more resources

than

had

previously

been

thought.

Resources

available to

the

state

seem

to

have been underestimated

until

now because

little

attention had been

paid

to the fact that

(i)

the

agro-

export

boom

may

also have stimulated

the

private

domestic

economy

and

thereby

increased

fiscal

revenues,

(ii)

the

state did resort to

foreign capital

markets

in some

measure,

and

(iii)

the terms of trade

may

have

improved.

However,

although

the

state had

greater

resources at its

disposal

than

had

been

thought,

it

may actually

have invested

only

a

portion

of the

boom's

proceeds

with

the

aim

of

expanding

the

country's

export

and

military

capacity.

More

specifically,

the state seems

to have aimed at

expanding

the

boom's

rents,

appropriating

them,

and

defending

them from what

it

perceived as the competition of predatory neighbouring states. Many of

the

rents

that

accrued

to

the

state,

however,

were

simply dissipated.

In

conclusion,

the evidence

suggests

that

the

state

sought

to attain different

aims

than has been

suggested,

and achieved

considerably

less than

it

set

out to or

than has been claimed. These

alternative

hypotheses,

in

turn,

are

consistent

with

a

different

economic

theory

than

that

underlying

'revisionist'

hypotheses.4

This article is

organised

as follows. The first

section

begins

by

describing

the

agroexport

boom

and the fiscal revenues derived

from it

and

other

sources; then it examines government expenditures, in particular, state

investments.

The second section

analyses

the

money

stock,

the

price

level,

the

exchange

rate and the

balance of

payments,

as well as the

government's

monetary

and

exchange

rate

policies,

and their

effects.

The last

section

presents

the conclusions.

4

Revisionist

authors

usually

resort

to

dependency

or Marxian

heory

when

they

rely

on

theory

at all.

Early

applications

of

dependency

theory

include Richard

Alan

White's

Paraguay's

Autonomous

Revolution,

I810-184o

(Albuquerque,

New

Mexico,

1978)

and

Whigham's

Iron

Works

of

Ybycuf'.

A

relatively

toned-down version

of

dependency

theory is apparent in more recent works like Batou's Cent ans and Reber's

'Modernization

rom within'.

Among

Marxist

analyses,

an

early

one

is Oscar

Creydt's

Formacion

istdrica

e

la nacidn

araguaya

Moscow,

I963);

a

more recent one is

Guerra

Vilaboy's Paraguay,

e a

independencia

la dominacion

mperialista,

hich

specifically

cites

(p.

90)

V. I. Lenin's 'Sobre

el

impuesto

en

especie',

in

Obras

escogidas

Moscow,

I96

i),

as

relevant

to understand he

state

capitalism

hat

allegedly

obtained

in

early

national

Paraguay.

John Hoyt

Williams's Rise and

Fall

is

apparently

unconcernedwith

theory

and

only

seeks

to

provide

an

accurate

description

based

on

archival evidence.

However,

descriptions

mply

some

theory,

even

if

ad

hoc

or unstated.So do

interpretive

judgements

such as

Williams's

categorisation

of

early

national

Paraguay

as a case of

'state

socialism'

(pp.

92-5),

previously

advanced

by

Pelham Horton

Box,

Origins

f

the

ParaguayanWar (New York,

1930),

p. 12. The theoretical framework underlying the

alternative

hypotheses put

forth here

is the new institutionaleconomics based

on

the

work

of

Ronald

Coase,

Douglass

North and

Oliver Williamson.For

a

good summary

of its main

tenets

see

Jeffrey

Nugent

and M. K.

Nabli,

The

New

Institutional conomics

and Economic

Development

Amsterdam,

I989).

For

space

constraints these alternative

hypotheses

can

only

be formulatedhere.


5/31

298

Mario Pastore

Agricultural

export

boom,

fiscal

resources and state investments

This section reviews the evidence available

in

secondary

sources

on

state

fiscal resources and

expenditures.

I will first consider

government

resources obtained

through

direct state

exports,

taxation,

government

borrowing

abroad

and

improvements

in

the terms of trade. Then

I

will

review the data

on

total

government spending,

state

imports

and

investments

in

particular.

(i)

Government

receipts

(a)

State

exports.

The available data

-

whose

reliability

will not be

questioned for the moment - suggest that sales of Paraguayan products

abroad

began

to

grow rapidly

once

the

Argentine government opened

the

Parana River

to free

navigation

in

I852.5

According

to

Herken Krauer's

estimates,

total nominal

exports

increased sixfold between

8

5

I

and 8

59.6

Reber's

figures

reveal

a

similar

behaviour.7

Both

export

volumes and

export prices

rose.8

However,

the

high

rate of

growth

of

export receipts

is due

to the fact that

exports

were

very

small before

8

5

2,

i.e. that the rate

of

growth

is

calculated on a small base.

Thus,

although export earnings

grew

very

rapidly, they

continued

to be

extremely

modest

when

compared

with those of

Argentina.9

Four commodities

generated

almost all of the

growing export receipts.

The

greater part

of the increase is attributable

to

yerba

mate

and

tobacco

5

In

the first

part

of the

early

national

period,

hindrances

to trade had resulted

in a

substantial

decline of

Paraguayan exports

relative to the

late colonial

period.

For

an

analysis

see Mario

Pastore,

'Crisis

presupuestaria,

regresion

institucional,

y

contraccion

econ6mica:

consecuencias econ6micas

de la

independencia

en el

Paraguay,

8Io0-1840',

in Leandro Prados and Samuel

Amaral

(editores),

La

independencia

mericana:

sus

consecuenciasconomicasMadrid, 1993), pp.

164-200;

or the later version of this paper

(see

fn.

76,

below).

The

Paraguayan government

had

repeatedly

demanded

free

navigation

of the Parana

river from the

Argentine government

before

185

2.

However,

after

1852

it

did

not

readily

want to

grant

similar

rights

on the

Paraguay

river

to the

Brazilian

government,

which

needed access

to

Matto

Grosso.

Frictions

with Brazil

developed

over

this issue

-

as well as over

whether

Britain would

enjoy

similar

rights

-

which contributed

to the later War

of the

Triple

Alliance or

Paraguayan

War.

See

Box,

Origins,

ch. 2.

6

See

Juan

Carlos Herken

Krauer,

'Proceso econ6mico

en el

Paraguay

de Carlos

Antonio

L6pez:

la visi6n del c6nsul britanico

Henderson

(1851-I860)',

Revista

Paraguaya

de

Sociologia,

vol.

19,

no.

54

(May-Aug.

I982),

p.

Io8,

cuadro

8.

7 See Reber, 'Modernization from Within', Table 13, 'Paraguayan Imports and Exports,

1792-1880'.

8

On

export

volumes and

prices

see Herken

Krauer,

'Proceso

econ6mico',

p.

I Io,

Table

4

and

p.

I

3,

Table

8,

respectively.

9

For

Argentina's exports

see

Laura

Randall,

A

Comparative

Economic

History

of

Latin

America,

1o00-I914,

vol.

2

(Ann

Arbor, MI.,

I977),

pp.

204

and

219.


6/31


7/31

300

Mario Pastore

Table i

Yerba

mate

prices

(in f/arroba) I854 i86o-i

Paid

by

the state

to

o.

I5

.2I-0.2z5

licensed individuals

Paid for

yerba

mate

in

0.30

the internal

market

Paid for

export quality

0.70-0.80

0.5

I

yerba

mate in

Asunci6n

Paid

in

Buenos Aires

1.40-I.60

paid

for

yerba

mate in

1854

and i86o-i are shown

in

Table

i.15

Herken

Krauer also reports that the state paid for the yerba mate partly with

imported

merchandise,

which

suggests

that the

state had a

monopoly

on

at

least some

imports

as

well.16

The state's share of

production

and

exports

was,

of

course,

much lower

in

the case of

goods

it did not

monopolise.

Thus,

most

production

and

sale of tobacco and

cigars

in

the local market or abroad was

attributable

to

private agents.

Likewise,

although

state

ranches

and

tanneries

produced

leather

goods,

the state did allow

private production

and sale in local

and

foreign

markets.

Though

the

state

did not

itself

monopolise

these

commodities, it granted privileges for their manufacture to persons

closely

associated to the

regime,

in

particular

to

members

of

the

governing

family,

whom it

protected

from

foreign

competition.

Reber

notes

that 'to

increase state

profits

on

commercial transactions the

government

sometimes dealt with favored merchants and

agents

or hired

its own commercial

agents.

Friends

and

family

of

Carlos

Antonio

L6pez

benefited

in

many

of

these transactions'. She adds

that 'from

185 5,

when

twenty

nine

year

old Francisco Solano

L6pez,

eldest son

of the

president,

handled

correspondence dealing

with

state transactions

in

Buenos Aires

and London, it was often difficult to

distinguish

his

personal

speculations

from

state business'.17

15

Price data are from Herken

Krauer,

'Proceso

econ6mico',

p.

89.

16

This

hints at a

similarity

with the first half of the nineteenth

century, during

which

Chaves asserts

that 'the

monopoly

of

exports

was

completed

with a

monopoly

on

imports'.

See

Julio

Cesar

Chaves,

El

Supremo

Dictador.

Biografia

de

Jose

Gaspar

de Francia

(Madrid, 1964),

p.

287.

17

'Modernization

from

Within',

chapter

X,

pp.

I6,

30-I,

and

32-3.

Reber also

reports

that 'the decree of

G6

anuary

855,

which made

cigars

duty

free,

required patents

for

the establishment of

factories,

and

large

enterprises

had

difficulty obtaining permission

to operate. This decree may have favoured the cigar manufacturing establishment in

Asunci6n

belonging

to Colonel Venancio

L6pez,

son of the

president

as

it

appeared

directly

aimed

at

closing

down the concern

of Edward

Hopkins'

(chapter

IV,

p.

I5).

In

addition,

'(o)ne

of the

president's

relatives

had a

large

business and obtained hides

to

process

from the

military'.

Two other

individuals

closely

tied to

the

regime

obtained

similar

privileges

(ch.

IV,

p. I9).


8/31

State-led Industrialisation

n

Paraguay

301

Table

2. Nominal state

exports

(in

pesos fuertes)

Total state

%

of total

Year exports exports

1854 300,000

38.5

8

I

855

230,000

23.00

856

530,000 46.36

i857

658,400

39.27

858 609,041

49.00

1863

1,097,380

52.00

Source: Vera

Blinn

Reber,

'Modernization

from

Within',

Table

22,

'Values of state

exports

for

various

years'.

Table

2

gives

available

figures

on

state

exports,

which seem

to

have

been

very

small

even after

they

are

adjusted

to correct for a

possible

under-estimation

of their

true

value.18

Thus,

it

does

not

seem

possible

that

state

exports

alone could have financed

an

industrialisation effort.

However,

it is conceivable

that other

sources

of state income

might

have

been

large

enough

to

finance a

programme

of

state investments

sufficiently

ambitious

to

merit

being designated

as a

'spectacular

industrialisation

attempt'.

Private

exports

and

imports

also increased

and

together

with

the

growing state trade may have led to a rising trade surplus, both of which

could have resulted

in

rising

tax revenues.

Likewise,

the state

could

have

borrowed

in

foreign capital

markets

and,

finally,

the terms of

trade

may

have

improved.

To

verify

whether

this

was or

was

not the

case,

we

move

on to examine state

revenues

obtained

through

taxation

and

borrowing

abroad.

(b)

Government

revenues. This subsection will first examine data

on

government

accounts available in

published secondary

sources;

it will

then turn to data offered more recently by Reber.

Data on

government

revenue

available

in

published secondary

sources

are even more scarce than data on

exports.

These sources offer

only

one

estimate

by

an observer

on

total revenues raised

by

the

government.

The

estimate

for 8

54

comes from the British Consul

Henderson,

according

to

whom total fiscal income that

year

reached

i

5o,ooo.19

Also available is

a

I982

estimate

by

Herken

Krauer for total

government

income between

I85

and

I86o,

which

distinguishes

between income from direct

state

18

According to Herken Krauer, some state exports to the Buenos Aires market do not

appear

in

the relevant

registries

published

by

the

government,

a

problem

which would

become

worse towards the end of

the decade

of

the fifties and the

beginning

of the

sixties,

'when the

greater availability

of national

ships

and

the

greater regional

demand

for

Paraguayan products

makes

this

type

of

commercial

operation

more

profitable'.

See

'Proceso

econ6mico',

p.

96.

19

Ibid.,

p.

92.


9/31

302

Mario Pastore

Table

3.

Nominal

government

income

(in

pesos

fuertes)

1857

i858

Tax

revenues

Import

tax revenues

Export

tax revenues

Tithe

Stamp paper

Anchorage

and

navigation

fees

Total tax revenues

Rents of state

properties

Sales of state

products

to

public

Various state sales

to

public

(i.e.,

gold imports)

Foundry

products

Receipts

of

paquets

and

steamships

Passports

to

foreigners

Sales of

yerba

mate

Tolls on

Tebicuary

river

Sub-Total

Total income

Tax

collected from

previous

years

Total

1,413,293

424,270

i,837,563

Source:

Vera

Blinn

Reber,

'Modernization from

Within',

Paraguayan

Government

for

Various

Years,

186-i

864'.

202,789

81,488

105,694

350,000

72,288

413,293 812,259

2,055,807

462,748

2,5

i8,555

Table

17,

'Revenues

of the

exports

and from taxation

of

exports

and

imports.20 According

to

these

data,

total

government

income

reached almost

?200,000 (approximately

$i

million)

in

I857,

and

slightly

exceeded

?300,000

(approximately

$

.

5

million)

in

1860.

Clearly,

the available information indicates that

even

in

the best

years

total

government

income was

too

small

to

justify

any

talk

of a

'spectacular

industrialisation

effort'.

Any

such conclusion

would

thus

be unwarranted.

Furthermore,

it is not

clear

just

how

reliable

this

information

is;

it is

not known

how

Henderson reached

the

figures

he

proposed;

similarly,

Herken

Krauer

did

not

specify

with sufficient

clarity

the

sources

from which he extracted even

one of the

figures

he cited

in

his

Table 3.21 Unless we know how Henderson arrived at his estimates and

20

The data

in

question appear

n

ibid.,

Table

3, p.

109.

21

The

numbers

Herken

Krauer

provided

for

government

revenues

from taxation of

imports

and

exports

for

i85

5-59

are

'data

re-elaborated

by

the author on the basis of

information

provided

in

Henderson's

reports

and the

bibliographical

sources

cited'.

411,000

1,000,000 34,000

250,000

22,5

12

66,958

1,626

454,722

2,730

1,243,548


10/31


n

Paraguay

303

can

verify

Herken Krauer's

calculations,

these

figures

would have

to be

considered

tentative.

We

can

compare

Herken Krauer's

figures

with more recent ones

furnished

by

Reber for several

years

of the

period

under

study.22

Those

corresponding

to two

particularly

good years,

I857

and

I858,

are

reproduced

in

Table

3.

I858

figures

are

more

disaggregated,

and will

be

examined

first. These

suggest

that the

government

obtained

income from

four main

sources: state

exports,

sales

of

state

enterprises

in local

markets,

taxation

of

foreign

trade and taxation of domestic economic

activity.

Among

government

revenues

from

direct state

participation

in

foreign

trade

or its taxation

were

those derived

from

the

government's

monopoly

on yerba mate and naval construction woods, from taxes applied on

exports

(those

of

gold

and silver

included)

and

imports,

from licences

issued

to individuals

to

trade within and outside the

country,

and from

fees

charged

for

navigation,

for the use of

port

facilities,

and

for

issuing

passports.

The

government

also derived revenue from

selling

the

output

of the

'ranches of

the fatherland'

as well

as

from the

sale

and

rental of

fiscal

lands.

To

these

must be added

revenues

contributed

by

direct

taxes

like the

dieZmo

and

the media

anata,

and

by

indirect taxes such as the

sales

tax

(alcdbala),

stamp

paper

and

the

inflationary

tax.23

Property

taxes

such

as those imposed in Argentina do not seem to have been applied.

The

customs

legislation

of

I84i

raised

taxes

on

exports

and

imports,

the

latter,

in

particular, being

assessed

at

40%

ad valorem.24 New customs

regulations

introduced

in

1846

reduced taxes on

exports

and

imports,

and

the new rates continued

to

apply

during

the fifties and the first half of the

sixties save for

small

modifications.

From

then

on

exports paid

00o%

ad

valorem

in

general.

Tobacco,

cotton and other

exports

paid

only

6%.

Imports

generally

paid

20%,

although

luxury

articles

paid

25

% and

agricultural

machinery

and

instruments

paid

no

import

tax.

Re-exports

paid

a i % tax. In

i855

the tax rate on tobacco and raw leather

exports

increased

from

o0%

to

I5

%,

but that on

cigars

and tanned

leather

decreased.

In

addition towards

the end

of the

fifties,

exports

of certain

types

of

wood

began

to

pay

a 20

%

tax

and the

export

tax on

cigars

was

See 'Proceso

econ6mico',

p.

107.

Unfortunately,

Herken Krauer

does

not

provide

the

original

numbers,

the

specific

sources from which

they

were

extracted

or

the

method

by

which

he

re-elaborated them.

22 The years of the period at issue for which Reber furnished data were

I85o,

1853,

I856-8,

and

I860. See

Reber,

'Modernization from

Within',

Table

17,

'Revenues of

the

Paraguayan

Government

for various

years,

1

86-1864'.

23

See Herken

Krauer,

'Proceso

econ6mico',

p.

92.

24

According

to

Juan

Andres

Gelly's

Paraguay:

lo

quefue,

lo

que

es,y

lo

que

sera

(Paris,

1926),

cited

in

Herken

Krauer,

'Proceso

econ6mico',

p.

93.


11/31

304

Mario

Pastore

eliminated. Herken

Krauer

argues

that these measures 'reflect an

attempt

by

the

state to stimulate

exports

of...

products

of

greater

value added... in

which

the

private

sector

played

a

determining

role'.25

However,

'until

i860

the data...

does

not

show

that

those measures had

fundamentally

affected the

composition

of

foreign

trade,

except

for

cigar

exports,

which

gradually

increased and which in

1862-64

probably

reached a

higher

level

than that

registered

in the

decade of the fifties.

Exports

of

leather,

both

raw and

tanned,

actually

decreased

in

amount and unit

value,

due

to

supply problems

that became evident in

85

8 and to the

competition

from

platine production.'26

It

needs

to

be

pointed

out,

however,

that

higher

taxes on

exports

of

leaf tobacco and raw leather could

also

have

been due

to an

attempt

to

reduce

foreign

demand for them

and reduce the

prices

that

cigar

makers and tanneries had to

pay

for

these

inputs.

Tobacco was

produced by

the small

peasantry,

while the

cigar

factories and tanneries

were

owned

by

members of the

L6pez

family

or of

its

circle.

Defining

revenues

directly

attributable

to

foreign

trade so as to include

state sales of

yerba

mate,

revenues

derived from taxation

of

private

exports

and

imports, anchorage

and

navigation

fees,

and

passports,

those

corresponding

to

85

8

may

be calculated

with

information from Reber's

Table 20.

They

add

up

to

879,871

pesos

fuertes

($F)

which were

equivalent to ? 75,974, at the rate of exchange of $F5/? apparently in

force in the

decade

of

the

i85os.27

This

figure

is

significantly higher

than

that for

I854

cited earlier.

This

is

not,

however,

surprising;

in

I858

exports

of

yerba

mate were

almost

twice,

and

those

of

tobacco

were

almost three

times,

as

large

as those

of

1854.

Exports

of

woods, leather,

and

cigars

were also

generally greater

in

I858

than

in

1854.

In

addition,

increased

private exports

led to

increased

private imports

and,

con-

sequently,

to

higher government

revenues derived

from

their taxation.

Proportionately,

however,

government

income

attributable

to the

foreign

sector for 858 amounted to

slightly

less than 40

per

cent of total

government receipts.

This

proportion

is

significantly

lower than that

estimated

by

Herken Krauer for

I854

(60 %)

and

contradicts his

notion

that

government

income from the

foreign

sector as

a

proportion

of total

government

income had

probably

increased towards

1857-9.28

Clearly,

if

government

income attributable to the

foreign

sector increased

absolutely,

but diminished as a

percentage

of the also

rising

total

government

income,

the

percentage

attributable

to

domestic sources

must have increased.29

25

'Proceso econ6mico', p. 94.

26

Ibid.,

p. 95.

27

Ibid., p.

109.

28

Herken

Krauer

does

not indicate the bases of his

estimate,

which must therefore be

considered

speculative.

29

One must take into

consideration,

however,

that

total

exports

were lower

in

85

8 than

in the

immediately

preceding

and in the two

immediately

succeeding

years.

Consequently,

it is

possible

that,

in

I858,

revenues from

foreign

trade

may

have been


12/31


n

Paraguay

305

The increase

in fiscal

income not

directly

derived

from taxation of the

foreign

sector

could

conceivably

be attributed

to an increase in domestic

economic

activity

induced

by

the

export

boom. We

note,

in

particular,

that

tax collections

derived from

the tithe

($FIo5,694),

from

the rental

of

public

lands

($F4II,ooo),

from

the

sale

of the

produce

of state

lands

($F25o,ooo)

and

of the

state

foundry

($F22,5 i2)

add

up

to

$F789,206.

If

to this

figure

we add

stamp paper

sales,

some

of

which must

have been

made

in

connection

with domestic

transactions,

we obtain

$F9I4,206,

a

figure

not

very

different from

government

revenues derived

from

foreign

trade.

Let us

now consider the behaviour

of fiscal income

in

I857.

Reber's

figures for that year are less disaggregated; they only distinguish

between customs

revenues

($F413,293)

and sales

of

products

of

state

ranches

to the

public

($Fi,ooo,ooo).

It would seem that revenues derived

from the

foreign

sector

are

proportionately

much

lower,

and those

derived

from internal economic

activity

much

higher,

than

in

1858.

This

would be

consistent

with the contention that domestic resources

were

much

more

important

than

previously

thought.

However,

Reber's

figure

for

I857

sales

of

produce

of state ranches

probably

includes

state

yerba

mate sales

abroad.

Evidently,

these

last

figures

do not seem reliable

and,

consequently, we cannot base ourselves on them to draw conclusions on

the

percentage

of total fiscal income attributable to the

foreign

and the

domestic

sectors,

respectively.

At

any

rate,

it

is

quite

clear that fiscal resources

capable

of

being

invested

in

the construction

of industrial

plant

were not limited to those

provided

by

the

foreign

sector,

and that the domestic

economy's

contribution

to

fiscal

income was

substantially greater

than has been

thought

thus

far.

Consequently,

the state could have financed its

investment

projects

not

just

from the

proceeds

of state

exports

and

foreign

trade taxation, but from the

proceeds

of a

higher

domestic economic

activity.

It could also have resorted to

foreign

credit,

which we will now

go

on to examine.

(c) Foreign

credit.

The

evidence available

in

secondary

sources

suggests

that the state borrowed abroad more

frequently

than has

previously

been

thought.

Based

on the

evidence,

one cannot

assert that the state did not

lowered as

compared

to those from other sources.

In

that

case,

forty

per

cent would

not

be

a

representativeproportion

of total

government

revenue

generated

by

the

foreign

sector. It is more

likely, however,

that

the

fall in

government

revenues from

foreign

trade was

accompanied

by

a

fall,

however

small,

of revenues

derived

from

domestic sources.


13/31

306

Mario Pastore

incur

any

foreign

debts. The state made

its

first

attempt

to obtain

loans

in

the

London

capital

market

in

855,

when the

export

boom

was

just

beginning

and it had

not

yet

established credit

among

London

money

lenders.

Perhaps

for

those

reasons

the

attempt

was not

successful,

and

the

state had to

content itself

with

?4,000

obtained from

merchants.30

However,

in

I862,

John

and Alfred

Blyth

lent

Francisco Solano

L6pez

50o,6

12,

that

is,

close to a

sixth

of total

export earnings

or a

third of total

state

exports

for

that

year

-

not

a

negligible

amount

in

any

event.31 In

i865,

after the

War

of the

Triple

Alliance was

unleashed,

the

state

seems

to have

attempted

to obtain a

loan

of

?5,ooo,ooo

for the

alleged

purpose

of

building

a railroad to Bolivia. It

is

possible

that the

response

was

negative because it was already clear that it was not very likely that

Paraguay

could

pay

back a loan of that

magnitude.

It

is

also

possible

that

other

attempts

were made. It

is

clear,

therefore

that,

if

the

state

did not

incur

greater

foreign

indebtedness,

it was not

because

it

did not want or

try

to.

(d)

Terms

of

trade.

The

resources

available

to the state

were also

greater

than has been

supposed

until

now because there

appears

to have

been an

improvement

in

the terms of trade.

Although

export

and

import price

indices are unavailable, other available evidence suggests that, in general,

export prices

rose and

import

prices

fell.32

Consequently,

the

country's

import

capacity

increased,

an

important

factor in

any

modernisation

attempt.

(2)

State

expenditures

This

subsection

explores

the

available

evidence

regarding

the manner in

which the state

spent

the

funds

at its

disposal, independently

of

how

or

where it

may

have obtained them.

We

will

distinguish

local state

expenditures

from state

expenditures

abroad. As in the cases

previously

30

See Herken

Krauer,

'Proceso

econ6mico',

p.

97.

31

On the

line

of

credit

Blyth

extended to

L6pez,

see

John

Hoyt

Williams's Rise

and

Fall...,

p.

i89.

Total

exports

for

i862

-according

to

Reber,

'Modernization From

Within',

Table

I3,

'Paraguayan Imports

and

Exports'

-

reached

$FI,867,000

which was

equivalent

to

3

I

,166

at a rate of

exchange

of

$F6/?.

To

reach

the

line of credit

proportion

of total

export earnings

I

assumed,

with

Reber,

that state

exports

were a

maximum of

52

%

of

total

exports.

We have seen that this

proportion

was much

lower

in

some

years,

in which case

Blyth's

line of credit

would

have been a still

greater

proportion

of

state

exports.

32

For export prices see Herken Krauer, 'Proceso econ6mico', p. 113, Table 8. Yerba

mate

and tobacco

exports

increased

between

852

and

I860.

Import prices

should

have

fallen,

but the

price

of

imported

flour rose

according

to Herken

Krauer,

ibid.,

p.

114,

Table

9.

Retail

prices

of

imported

goods

could have increased

for

local and

circumstantial

reasons,

for

example,

state

monopolies

and the more

rapid growth

of

demand for

imported

consumer

goods

caused

by

the boom.


14/31

State-led

Industrialisation n

Paraguay

307

discussed,

disaggregated quantitative

data

on

state

expenditures

are scarce

-

basically,

the

figures

for

1858

contained in British consular

reports

-

until

Reber furnished additional data on the

subject fairly recently.

However,

the British

consular

report

data

differ

substantially

from

those

Reber

herself

calculated

for

the same

year

on the

basis

of

archival

documentation,

in

a

4:

relation.

Consequently,

both

groups

of

figures

will have to

be taken as

tentative

until their relative

reliability

can

be

established.

For that reason

we

will

only

try

to

see what

these

figures

can

tell

us

about

the share of certain items

in

state

expenditures.

The

percentages

calculated

on

the

bases

of

the British

consular

report

figures

are followed

in

parentheses

by

the

percentage

calculated

on the basis of

Reber's figures. Almost 80 (40) per cent of state expenditures for that year

went

to

pay

for

military

salaries. Other

employees

of the executive

branch,

the

legislature,

and the

municipal

government

absorbed

4.76

(3.92)

per

cent,

and the Church

7

(o)

per

cent.

Public

works,

the

most

important

category

of state

expenditures

after

military

salaries,

absorbed

only

2

(o)

per

cent of state

expenditures.

In

turn,

only

20

per

cent of

state

expenditures

on

public

works

that

is,

2.4

per

cent

of

the

budget,

was

devoted to

public

works

properly speaking, specifically,

to the

foundry

and

the railroad.

An

activity

that had little

in

common

with

public

works,

yerba mate production, absorbed a much greater proportion, around 7

(35)

per

cent.33

(a)

State investments.

An

examination

of

secondary

sources

reveals

that

even

less data

are

available for this

category

than

for

those

previously

discussed.

Still to

be done is

the

basic

quantitative

research

on

state

accounts

and state

imports necessary

for a

detailed

description

of

state

investments.

In

particular,

no

estimates

exist of the real value of

state

investments

or of the

product

of

state

enterprises.

In

both

cases,

the

available

evidence allows for

only

a

qualitative description

to

be

made.

Consequently,

revisionist

hypotheses

on

industrialisation rest on

rather

weak foundations.34

In

what follows

I

will

give

a

summary

of

the

state's

investment

projects,

taking

special

care to establish

their

chronological

sequence

and

to

review

the

quantitative

data available

in

each case. It

will

become

clear

as

a

result that

the

evidence does not

justify

the

contention

that

anything

even

remotely

akin

to

industrialisation

took

place.

33

Reber,

'Modernization from

Within',

Table

I8,

'Paraguayan

Government

Expend-

itures for various years, I8I6-i866'. The column labelled 'i858b' contains Reber's

figures

based

on

those

in the

Libros

de

Caja

of the

Paraguayan overnment's

General

Treasury.

The column labelled

'85

8e'

contains

figures

from the British

Consular

report

on

the

finances

of

Paraguay.

34

That there also was some

private

nvestment s

clear,

but

it

is

not

known what it

might

have amounted

to.


15/31

308

Mario

Pastore

State

investment

projects

began

in earnest in

I853,

when

President

Carlos

Antonio

Lopez

sent

his son

Francisco

Solano,

then

a

general

and

Minister

of

War,

to

Europe.35

Francisco Solano

Lopez

visited

England,

France,

Spain,

Italy

and the theatre of

operation

of the Crimean War. In

London,

he established relations with

John

and Alfred

Blyth,

shipbuilders

of

Limehouse,

a concern that

would

henceforth act as

agents

of the

Paraguayan government. Through

Blyth,

L6pez

hired

John

William

K.

Whytehead,

who

would

eventually

become

chief

state

engineer,

as

well

as other

engineers

and machinists

of lower rank. He also

purchased

a

steam-driven

warship

in which he

returned

to

Asunci6n towards

the end

of

1854

with the technicians

he

had hired

and

the

capital goods,

raw

materials

and

military

materiel he had

bought.36

Working

directly

under

the

Minister

of

War,

Whytehead

designed

and

constructed

the

different

projects

that had been

taking shape

in

the mind

of

President

L6pez during

the

preceding

decade. These

projects

appear

to

have

become

more

ambitious

as

his son

became more

important

in the

government. Among

them

were,

first,

an

iron

foundry,

in which the

state

intended to

process

the

iron ore

extracted

from

local mines

;37

second,

an

arsenal,

where the

state

anticipated

that the

iron

produced

at the

foundry

would be

shaped

and

the

parts

obtained would be finished

and

assembled.

The arsenal would also produce, besides arms and munitions, inputs

needed

for other

projects being contemplated. Among

these was the

shipyard,

which would build the riverine

and

seagoing ships

for

the state

merchant

marine

and war

fleet

that

would facilitate

transportation

and

defence,

respectively;

the forts that would

control

strategic

stretches

of

the

Paraguay

River;

the

expansion

of the

port

of Asunci6n

that the

growing

trade would

make

necessary;

the railroad

that would

join

the

country's biggest port

and

population

centre,

Asunci6n,

with Villa

Rica,

the main

gathering point

for

the

most

important export product,

transporting exports outward and imports inland, and expanding the

35

Carlos Antonio

L6pez

had sent

a

similar mission

to Brazil at the end

of

the

previous

decade. See

below,

note

57.

36

The

warship

in

question

was the 'Tacuari'.

Among

the

capital inputs purchased

were

between

eight

and

ten

steam

engines.

See Robert

Scheina,

Latin America:

A Naval

History,

I810-1987

(Annapolis,

Md,

1987),

p.

i9,

note

o0.

37

L6pez

had tried

to

establish

an iron

foundry

twice before

Whytehead's

arrival,

both

times without success.

In the late forties he sent

Juan

Andres

Gelly

to

Rio de

Janeiro,

who hired

technical

personnel

and

purchased

needed

inputs.

This first

foundry

project

was directed

by

Henry

Godwin.

The

second

attempt

was

made

in the

early

fifties,

under

Augusto

Liliedat's direction.

See

Josefina Pli,

Los britdnicosen el

Paraguay (Asuncion,

1984),

pp.

29-38.

Subsequent

quotations

from Pla's

text

are

from this

Spanish original,

and do not

always

appear

in

Josefina

Pli's The British in

Paraguay

(Oxford,

I975,

translated

and with an 'Historical Introduction'

by

Brian

Charles

MacDermot).

The

Spanish

edition,

published

nearly

ten

years

after the

English

translation,

does

not

include

MacDermot's

very interesting

introduction.


16/31

State-led

Industrialisation

in

Paraguay

309

internal

market for

locally

produced

goods

and

services;

the

telegraph,

which would

accelerate still

more communications with

the interior

and

with

the fortifications

downriver;

and

the

buildings

that would be

required

for the

already

mentioned

projects

and

to

lodge

the

governing

family,

its circle

of close

associates,

and the state

bureaucracy,

whose

growing

number

and

importance

was

easy

to

predict.38

The

foundry

and

the

arsenal,

therefore,

would constitute

a

small-scale version

of a

capital

goods

industry.

Both

the

foundry

and the

arsenal

as well as

the

ships,

the

port,

the

railroad,

the

telegraph

and the

majority

of

the

public buildings

could

serve

not

only

an economic but a

military

purpose

as

well. In

fact,

during

the

War

of the

Triple

Alliance

they

were all

subordinated

to

the

latter purpose. Below I describe each of these projects in greater detail.

(i)

With

Whytehead

at the

helm

the

foundry

and

associated

projects

were

carried

out

between

early

I855

and

I857.

The

foundry

required

-

besides

the installation of the furnaces - the extraction of iron ore

and,

to

facilitate its

transport

and

that

of the

coal

needed

to

melt

it,

the

detouring

of

a natural

waterway,

its

dredging

in certain

stretches and its

channelling

in

others,

and

the

construction

of

the

dam that would move the wheel that

would

power

the furnaces' blowers.

Producing

charcoal

in

turn

implied

building

ovens.

Also,

wood needed

to be cut and

transported

to where the

ovens were located, a task that was carried out with carts produced at the

arsenal

moving

on

wheels

protected

by

iron

rims made

at the

foundry.

A

search

for

coal was

conducted,

but

it

was unsuccessful

-

despite

the fact

that

deposits

did

exist,

as was later verified.39

Apparently

both

L6pez

and

Whytehead

initially

held

serious

hopes

that

Paraguayan

iron could

eventually

compete

in the

region

with

that

from

Britain.

However,

the

foundry

never

resolved several

problems

of a

technical and

organisational

nature that

kept

this

goal

from

being

reached,

nor

could it overcome other

difficulties

presented by

nature. The

fundamental obstacle to the

expansion

of iron

production,

however,

turned out to be the

selection

of

inappropriate techniques

and

the failure

to

locate coal

deposits,

which

implied

the

use

of

charcoal as fuel.

The

foundry's

average output

level under normal

operating

conditions

cannot be calculated from available information.

According

to

Whigham,

total recorded

iron

poundage produced

at the

foundry

between

August

I854

and

January

I856

was

5,543

pounds,

which

he warns is a

partial

38

Sumptuous private

residences were built

for

the rulers.

Most

important among

them

was Francisco Solano L6pez's - now Paraguay's presidential palace. See Ram6n

Gutierrez,

Evolucidn

rbanzsticay

rquitectonica

el

Paraguay

Resistencia,

Argentina:

1978),

Segunda

edici6n.

39

After

the

war,

coal

deposits

were found

to

exist

in

present day

San

Estanislao,

Cerro

Le6n and

Paraguari.

See

Juan

Francisco Perez

Acosta,

Carlos Antonio

Lope:,

obrero

mdximo. Labor administrativa constructiva

Asunci6n,

1948),

pp.

59-60.


17/31

3

o Mario

Pastore

figure,

for

'many

articles

produced

in the

foundry,

as

well

as

all

of

those

from

the

smithy

were

without

poundage

figures'.

This

suggests

that,

initially, foundry production

was

at

least

300

pounds per

month or

almost

3,700

pounds

per

year.

He then

goes

on to assert

-

following

Trias

-

that

'by

I857,

more

than

I,ooo

pounds

of iron were

being

smelted

in

the

foundry every

twelve

hours',

a claim that Reber

reiterates.40

This

suggests

a

daily output

of

2,000

pounds

under continuous

operation,

or

730,000

pounds per

year,

a

sizeable increase.

This

figure

is

suspect

for two reasons.

First,

we

know

from Pla that

'even in the best

of

times,

the

yield

of the

Ybycui

furnaces did not reach

5,ooo

quintales

per

year'.41

A

quintal

equals

ioo

pounds

or four

arrobas

so

that output could not have exceeded 1,3 70 pounds per day even in the best

of

times. Thus

the

figure Whigham quoted

from Trias seems too

high;

also,

Trias

does

not

give

its source.42

Finally,

Whigham reports

that for

the twelve

months

during

which

the

foundry operated

between

April

i865

and

May

1866,

total

recorded

poundage

for the

foundry

and the

smithy

was

105,202

pounds,

which

suggests

that even the

figure

given by

Pla for

output

during

the best of times

may

be

an overestimate.43 Since six

of the

months included

in the

period

cited

by Whigham

followed the

beginning

of the

War

of the

Triple

Alliance,

one

would

suspect

that even

Whigham's figure is an overestimate of the foundry's average output

under

normal conditions.

From this discussion

it would

appear

that this

matter is far

from

clarified

or

settled.

An

indication

that the

foundry's

output

may

never

have reached

expected

levels is that the

state could never

accumulate

a

reserve

stock of

iron and

that iron

production

did

not reach

a scale sufficient

to

permit

local

production

of

the

iron-hulled

vessels that had

earlier been

thought

possible,

or of the railroad ties.44 These continued

to

be

imported,

together

with

pig

iron and coal. Once

the

original,

very

ambitious

40

Whigham's

figures

on

foundry

production

are

from

'The

Iron

Works

of

Ybycuf',

pp.

208

and

210,

respectively.

His source for

the

figure

he

quotes

on

p.

21o

is

Vivian

Trias,

El

Paraguay

de Francia el

Supremo

a la Guerra

de la

Triple Alianza

(Buenos

Aires,

1975),

p.

32.

The

Trias-Whigham

claim

reappears

in

Reber,

'Modernization

from

Within',

ch.

4,

'Education,

Industry

and

Mining', p.

22. She

gives

Whigham's

'Iron

Works...'

as

her source.

41

See

Josefina

Pli,

Los

britdnicos...,

p.

13I.

42

The sentence

where Trias makes the claim

in

question

is footnoted but the

footnote

where

the source is

supposed

to

appear

is

not

among

the rest of the footnotes

following

the text.

The

problem reappears

in Vivian

Trfas,

Obras de Vivian

Trias

(Montevideo,

I988),

pp.

148

and

206.

43 See 'The Iron Works of Ybycuf', p.

2

14. On the next page, however, Whigham reports

'Total recorded

poundage

for

Smithy

and

Foundry:

IO5-202

lbs',

which

suggests

a

yearly

poundage

of

between

I05

and 200

pounds.

This is

likely

to

be

a

typographical

mistake

and,

as

such,

we

disregard

it.

44

The conclusion

that the

original plans

would

have to

be

changed

for

more

modest

ones

was

apparently

reached

in March

I858.

See

Pla,

Los

britdnicos

en

el

Paraguay, p.

65.


18/31


n

Paraguay

3

I

expectations

for

the

foundry

were scaled

down,

no

attempt

was

again

made

to

increase

its

productive

capacity

until after

regional political

conflicts

became

more

acute and

the

probability

of war

increased

substantially.

In

1863,

Francisco Solano

L6pez

-

by

then President-

ordered

Whytehead

to

design plans

for a

new,

compressed-air

boiler.

However,

the

steam

engine

that

was

ordered

never arrived

in

Paraguay.

Similarly,

until a

very

late date

iron on its

way

from

the

foundry

to

the

arsenal

had

to be

transported

by

oxcart a

good part

of

the

way; only

in

May

1864

could this

distance be

reduced

by

half,

when

the railroad

finally

reached

Pirayu,

some

60

kilometres

away

from

Ybycui.

It is also

worth

pointing

out that

plans

to

build

a railroad link between

Pirayti

and

Ybycui

were

scrapped

as the

War

of the

Triple

Alliance

loomed; instead,

the

railroad

was extended

to

the

Army's

main

training camp

at Cerro

Le6n.

(ii)

The

shipyard

that

Whytehead

designed

and constructed

in

Asunci6n

was

expected

to

build

ships

for

the state merchant

and war

fleets.

Ships bought

abroad

would serve as

a model for those

the

shipyard

would

then

construct.

The fleet's main

ships

would

be steamers

capable

of

riverine

and,

in

some

cases,

of

ocean

navigation

as well. Consistent

with

this

plan

the first

three

steamships

were

bought

abroad.

The

already

referred

to

'Tacuari',

bought

in

London,

was

new,

while

the other

two,

bought in the River Plate, were second-hand. The shipyard buildings

were

all erected between

I

8

5

and

i85

6.4

Shipyard

personnel,

in

addition

to

constructing

and

repairing ships,

remodelled the

port

to

allow more

ships

to

dock

during

periods

of both

high

and

low

water,

and built

a

crane

to facilitate

the

handling

of

heavy

loads.

The first

of the

ships

constructed

in

the

shipyards

was launched

a

year

and

a

half

after Francisco Solano

L6pez's

return

from

Europe.

In the next

two

years,

four

more followed and two other

ships bought

abroad

were

rebuilt as

well.46 Between

1862 and

I864,

two more

ships

built

at the

shipyards were launched, one of which replaced another that had sunk.47

Only

partial

data exist

on

ship tonnage, purchase price,

or cost

of

construction.

Although

all the

ships

were

steamers,

side wheelers

or

propeller

driven,

they

were

all wooden hulled.

On

9

October

1857

Whytehead

presented

to

L6pez

a

project

to

construct

ironclads.

In March

I858,

however,

after

L6pez

had

insistently

inquired

about

the

project

and both

he

and

Whytehead

had discussed

it

further,

the

plan

was

apparently

abandoned,

for

the hulls of all the

ships

that followed

were made out of wood.48

In

August

1862-

when the

war

was

already

on the horizon

-

Whytehead

again

started

making

plans

to build iron

hulls

and

to

remodel the

45

Ibid.,

p.

62.

46

Ibid.,

pp.

63-4.

47

Ibid.,

pp.

I27-8.

48

Ibid.,

p. 65.


19/31

3

12

Mario

Pastore

shipyards,

but

the

international situation

did

not allow

him

to

carry

out

his

plans.49

After the

Paraguayan government

ordered the

capture

of

the

Brazilian steamer

Marques

de

Olinda

and

open

war

began

between the

two

countries,

the

shipyard

limited itself to

repairing

and

overhauling

ships

captured subsequently

(4),

purchased during

the

first months

of

I865

(3),

and

damaged

in naval

battles

during

the course of

the war

(many).

(iii)

The main function

of

the arsenal

was

to

provide

arms and

munitions

to

the

Army

and

Navy,

and

to

produce

the

machinery

its own

production

required.

However,

it also had

to

produce inputs

of a

different

type,

intended to

satisfy

the needs of

government

agencies

and

of

the

private

sector. These

demands,

although

secondary,

were

not

negligible.50

The total number

of

artillery pieces produced

in

the arsenal, together

with those

produced

in

Ybycui,

'perhaps

exceeded

25o'.

Until

i862,

the

cannons

produced

in

Ybycui

or in

the

arsenal,

and

finished

in

the

latter,

were made

of iron

and,

following

the installation of the

necessary

ovens,

of

bronze

as well.51

It

seems

that,

until

i865,

all

the

cannons

produced

were

smooth

bore.

It

also

seems that

no

attempts

were made to

produced

rifled cannons until after

the war had

begun,

but it is not

clear

whether these

attempts

were successful.52 The arsenal also

produced

an

'enormous'

quantity

of

munitions,

both 'solid

and

hollow',

as

well as

'grenades, land and naval gun carriages, and iron oxcarts'.53 The arsenal

also

produced

many

spare parts

with which

to

repair

the steam

engines

and the

ships.54

Also constructed

initially

were

two

floating

docks to be

used

in

repairing ships,

and

in

November

858

a

machine

to launch

ships

was also under construction.55

To make

it

possible

to

produce

this

varied

output,

modern

machinery

was installed

-

some

imported,

some

produced

locally

-

though

it is not

49

Ibid.,

pp.

127-8.

50

In addition to

supplying

the

shipyard,

the arsenal later

supplied

the

railroad,

the

militaryhospital,andeven the privatesector. These demandednot only partsandspare

parts

but

repairs

and maintenanceas well.

Pla

suggests

that

'toward

1864,

the number

of

private

commissions were

choking

the arsenal'. Some

presumably ypical examples

of work the arsenalcarried

out for the

'private

sector' included

repairs

on

the bedstead

belonging

to Ana Paula

Carrillo,

mother

of the

President,

as

well

as structural

and

ornamental ron

works

of the new

buildings belonging

to the President'srelatives. See

Los britdnicosen

el

Paraguay,

pp.

33-4.

51

'The first

brass

cannon,

a

I2-pounder

was cast on

26

July

I862;

but not

enough

metal

was

apparently put

into the

furnace

and the cannon came out

headless.

The second

cannon was cast on

8

October,

and the

third,

on i8 December'. See

Pla,

Los

britdnicos

en

el

Paraguay,

p.

13

.

52

Pla reports that a sample rifled cannon had been bought in England and brought to the

arsenal,

where

it was

put

away

for several months

until

Whytehead

himself noticed it.

See

Los

britdnicos

n

el

Paraguay,

p.

3

.

Considering

the

vital

importance

of

that

sample,

it is

surprising

that the chief

engineer

should have allowed

it to suffer

such

a fate.

This event

suggests

a certain

inefficiency

in

arsenal

operations.

53

Ibid.,

p.

132.

54

Ibid.,

p.

69.

55

Ibid.,

p.

71.


20/31

State-led

Industrialisation in

Paraguay

3

3

clear what

machinery

was

imported

and

what was

produced

locally.56

The

energy

available

to

operate

these

machines

was

apparently

minimal,

however,

for it was

provided by

a

single

steam

engine

mounted

on

wheels.57

The

arsenal's

plant

was

among

the

largest

that

had

been

built

in

Paraguay

until that time.

However,

its

output

was not sufficient to

satisfy

the

requirements

of national defence

plans, according

to

Pla.58

(iv)

The railroad

originally

envisioned

would

join

Asunci6n with Villa

Rica,

some

I50

kilometres

away.

The

inputs

to

build it

began

to

be

accumulated after

the

first

ships

were

bought,

construction of the

foundry

was

underway,

the

shipyard

and

the

arsenal

began

to

be built

and

the first

ships

were

launched. Iron rails and

planks,

locomotives

and

wagons

began arriving in Asunci6n in 1856 on board private and state merchant

ships.

Construction

itself,

however,

did

not

begin

until

I858,

though

prerequisite

tasks such

as

opening

the trail and

building

the

Industrialización en Paraguay

Documents

Transcript of Industrialización en Paraguay